Verizon ends 2021 with strong wireless service revenue and EPS growth
January 25 2022 - 6:00AM
Verizon Communications Inc. (NYSE, Nasdaq: VZ) closed 2021 with
another quarter of strong wireless service revenue growth and
increased 5G phone adoption, as more than one in three Consumer
wireless phone customers now have a 5G-capable device. "2021 was a
transformational year for Verizon that will serve as a catalyst for
us," said Verizon Chairman and CEO Hans Vestberg. "We delivered on
all of our goals in 2021 and made great progress on our five paths
of growth, finishing the year with strong operating and financial
momentum. As we move into 2022, we have the necessary assets to
realize our strategy that we laid out in 2019. We are laser focused
on executing our 5G strategy and providing value to our customers,
shareholders, employees, and society, as 2022 will be the most
exciting year yet for Verizon."For fourth-quarter 2021, Verizon
reported EPS of $1.11, compared with $1.11 in fourth-quarter 2020.
On an adjusted basis*, fourth-quarter 2021 EPS, excluding special
items, was $1.31, compared with adjusted EPS* of $1.21 in
fourth-quarter 2020, an 8.3 percent increase year over
year.Fourth-quarter 2021 EPS included a net pre-tax loss from
special items of approximately $1.2 billion. This included a charge
of $2.4 billion for the early extinguishment of debt, a $106
million charge related to severance, a $1.2 billion credit
pertaining to annual mark-to-market for pension and OPEB (other
post-employment benefits) liabilities, and a net gain of $131
million primarily related to the disposition of an investment.
Fourth-quarter 2021 results also included the revenue associated
with the acquisition of TracFone, as the deal was completed on
November 23. The revenue associated with TracFone in 2021 was
approximately $700 million higher than the revenue from TracFone in
fourth-quarter 2020.For full-year 2021, Verizon reported $5.32 in
EPS, compared with $4.30 in full-year 2020. On an adjusted basis*,
excluding special items, 2021 EPS was $5.39, compared with 2020 EPS
of $4.90, a 10.0 percent increase year over year.
“Verizon delivered another strong earnings performance this
quarter,” said Verizon Chief Financial Officer Matt Ellis. "Our
financial discipline enabled us to deliver attractive service
revenue growth and profitability this quarter as we expanded our
portfolio with the TracFone acquisition and saw strong demand for
our products and services. In 2021 we delivered on raised adjusted
EPS* expectations, grew revenue, achieved our $10 billion cost
savings goal, and funded our C-Band spectrum investment."
Consolidated results
- Total consolidated operating
revenues in fourth-quarter 2021 were $34.1 billion, down 1.8
percent from fourth-quarter 2020. Adjusting for the sale of Verizon
Media on September 1, operating revenue grew 4.8 percent year over
year. Strong wireless service revenue growth and wireless equipment
revenue were offset by continued declines in legacy wireline
products. Full-year 2021 consolidated operating revenues were
$133.6 billion, up 4.1 percent year over year.
- Cash flow from operations totaled
$39.5 billion in 2021, a decrease from $41.8 billion year over
year. Continued strong performance in the business was offset by
higher working capital from device payments receivables, and higher
cash taxes.
- Full-year 2021 capital expenditures
were $20.3 billion. Capital expenditures continue to support the
growth in traffic on the company's 4G LTE network as the company
initiates the first phase of C-Band deployment covering more than
95 million people in the U.S. Capital expenditures related to
C-Band were approximately $2.1 billion in 2021.
- The company ended 2021 with free
cash flow* of $19.3 billion, a decrease from $23.6 billion at
year-end 2020.
- Verizon's unsecured debt as of the
end of fourth-quarter 2021 increased by $18.2 billion year over
year to $136.7 billion, but improved by $4.9 billion sequentially
from the end of third-quarter 2021. The company's net unsecured
debt* balance increased year over year by $37.5 billion to $133.7
billion at the end of fourth-quarter 2021, but decreased by $3.7
billion from the end of first-quarter 2021, with its net unsecured
debt to adjusted EBITDA ratio* at approximately 2.8 times at the
end of fourth-quarter 2021.
Consumer results
- Consumer saw strong demand in
fourth-quarter 2021 for its higher-tier premium mobility and
broadband offerings. Strong wireless service revenue momentum,
healthy profitability and significant Fios revenue growth
highlighted the quarter. Consumer continued to expand its
leadership in 5G adoption, ending 2021 with more than one in three
wireless phone customers having 5G-capable devices.
- Total Verizon Consumer revenues
were $25.7 billion in fourth-quarter 2021, an increase of 7.4
percent year over year. This included the net revenue change from
TracFone of approximately $700 million, including approximately
$500 million of incremental service revenue year over year. For
full-year 2021, total Verizon Consumer revenues were
$95.3 billion, an increase of 7.6 percent from full-year
2020.
- Consumer wireless service revenues
were $14.6 billion in fourth-quarter 2021, a 7.7 percent increase
year over year, reflecting ongoing step-ups to unlimited and
premium unlimited plans, and the contribution from TracFone. For
full-year 2021, total Consumer wireless service revenues were
$56.1 billion, an increase of 4.7 percent from full-year
2020.
- Consumer wireless retail postpaid
churn was 0.94 percent in fourth-quarter 2021, and wireless retail
postpaid phone churn was 0.77 percent.
- In fourth-quarter 2021, Consumer
reported 667,000 wireless retail postpaid net additions. This
consisted of 336,000 phone net additions and 369,000 other
connected device net additions, offset by 38,000 tablet net losses.
Consumer also reported 85,000 wireless prepaid net losses, which
included TracFone results since November 23.
- Consumer reported 51,000 Fios
Internet net additions in fourth-quarter 2021, and 339,000 Fios
Internet net additions in full-year 2021. Consumer Fios revenues
were $2.9 billion in fourth-quarter 2021, an increase of 5.6
percent year over year. Consumer reported 69,000 Fios Video net
losses in fourth-quarter 2021.
- In fourth-quarter 2021, Consumer
segment operating income was $7.3 billion, an increase of 3.9
percent year over year, and segment operating income margin was
28.6 percent, a decrease from 29.6 percent in fourth-quarter 2020.
Full-year 2021 segment operating income margin was 31.4 percent, a
decrease from 32.6 percent in full-year 2020. Segment EBITDA*
totaled $10.3 billion in fourth-quarter 2021, an increase of 4.1
percent from fourth-quarter 2020, driven by service revenue growth.
Segment EBITDA margin* was 40.3 percent in fourth-quarter 2021, a
decrease from 41.5 percent in fourth-quarter 2020, due to higher
equipment revenues associated with increased volumes. For the full
year, segment EBITDA margin* was 43.7 percent in 2021, a decrease
from 45.5 percent in 2020.
Business results
- Business exited 2021 with strong
momentum in business activity and demand for wireless products.
Fourth-quarter 2021 was highlighted by strong phone gross additions
in Small and Medium Business and the fourth consecutive quarter of
wireless service revenue growth for Global Enterprise.
- Total Verizon Business revenues
were $7.8 billion in fourth-quarter 2021, down 3.0 percent year
over year. Wireless revenue growth continues to offset ongoing
legacy wireline declines. For full-year 2021, total Verizon
Business revenues were $31.0 billion, an increase of 0.3
percent from full-year 2020.
- Business wireless service revenues
were $3.1 billion in fourth-quarter 2021, a 1.5 percent increase
year over year. Full-year 2021 Business wireless service revenues
were $12.4 billion, an increase of 4.8 percent from full-year
2020.
- Business wireless retail postpaid
churn was 1.26 percent in fourth-quarter 2021, and wireless retail
postpaid phone churn was 1.01 percent.
- Business reported 391,000 wireless
retail postpaid net additions in fourth-quarter 2021, including
222,000 phone net additions. This was the best quarterly phone net
addition performance for Business since the onset of the
pandemic.
- In fourth-quarter 2021, Business
segment operating income was $796 million, a decrease of 16.2
percent year over year, and segment operating income margin was
10.2 percent, a decrease from 11.8 percent in fourth-quarter 2020.
Full-year 2021 segment operating income margin was 11.1 percent,
compared with 12.2 percent in full-year 2020. Segment EBITDA*
totaled $1.8 billion in fourth-quarter 2021, a decrease of 7.4
percent from fourth-quarter 2020. Segment EBITDA margin* was 23.5
percent, a decrease from 24.6 percent in fourth-quarter 2020,
driven by pressure in legacy wireline products. For the full year,
segment EBITDA margin* was 24.2 percent in 2021, a decrease from
25.4 percent in 2020.
Outlook and guidance
For 2022, Verizon expects the following:
- Organic service and other revenue
growth of around 3 percent. On a reported basis, which includes the
net impact of the sale of Verizon Media and the company's ownership
of TracFone, service and other revenue growth is expected to be in
a range of 1.0 percent and 1.5 percent.
- Reported wireless service revenue
growth in the range of 9 percent to 10 percent. Excluding the
impact of the TracFone acquisition, wireless service revenue is
expected to grow at least 3 percent.
- Adjusted EBITDA* growth in the
range of 2 percent to 3 percent.
- Adjusted EPS* of $5.40 to $5.55.
The company expects adjusted EBITDA* growth in 2022 to be offset by
headwinds from non-cash items. Beginning in 2022, the company's
adjusted EPS* will exclude amortization of acquisition-related
intangible assets. In 2021, the intangible amortization negatively
impacted adjusted EPS* by approximately 11 cents. In 2022, the
company anticipates the impact to be approximately 17 cents to 19
cents.
- Adjusted effective income tax rate*
in the range of 23 percent to 25 percent.
- Capital spending, excluding C-Band,
in the range of $16.5 billion to $17.5 billion, a decrease from
$18.2 billion in 2021, as the company has started its progress
towards lower capital intensity. Additional expenditures related to
the deployment of the company's C-Band 5G network are expected to
be in the range of $5 billion to $6 billion as the company
continues to build out the initial markets and begins preparations
for deploying Phase 2 spectrum.
*Non-GAAP financial measure. See the accompanying schedules and
www.verizon.com/about/investors for reconciliations to generally
accepted accounting principles (GAAP) for non-GAAP financial
measures cited in this document.
Verizon Communications Inc. (NYSE, Nasdaq: VZ) was formed on
June 30, 2000 and is one of the world’s leading providers of
technology and communications services. Headquartered in New York
City and with a presence around the world, Verizon generated
revenues of $133.6 billion in 2021. The company offers data, video
and voice services and solutions on its award-winning networks and
platforms, delivering on customers’ demand for mobility, reliable
network connectivity, security and control.
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Forward-looking statementsIn this communication
we have made forward-looking statements. These statements are based
on our estimates and assumptions and are subject to risks and
uncertainties. Forward-looking statements include the information
concerning our possible or assumed future results of operations.
Forward-looking statements also include those preceded or followed
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or publicly release the results of any revision to these
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risks and uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements. The following
important factors, along with those discussed in our filings with
the Securities and Exchange Commission (the “SEC”), could affect
future results and could cause those results to differ materially
from those expressed in the forward-looking statements: cyber
attacks impacting our networks or systems and any resulting
financial or reputational impact; damage to our infrastructure or
disruption of our operations from natural disasters, extreme
weather conditions or terrorist attacks and any resulting financial
or reputational impact; the impact of public health crises,
including the COVID-19 pandemic, on our operations, our employees
and the ways in which our customers use our networks and other
products and services; disruption of our key suppliers’ or vendors'
provisioning of products or services, including as a result of
geopolitical factors, the COVID-19 pandemic or the potential
impacts of global climate change; material adverse changes in labor
matters and any resulting financial or operational impact; the
effects of competition in the markets in which we operate; failure
to take advantage of developments in technology and address changes
in consumer demand; performance issues or delays in the deployment
of our 5G network resulting in significant costs or a reduction in
the anticipated benefits of the enhancement to our networks; the
inability to implement our business strategy; adverse conditions in
the U.S. and international economies; changes in the regulatory
environment in which we operate, including any increase in
restrictions on our ability to operate our networks or businesses;
our high level of indebtedness; significant litigation and any
resulting material expenses incurred in defending against lawsuits
or paying awards or settlements; an adverse change in the ratings
afforded our debt securities by nationally accredited ratings
organizations or adverse conditions in the credit markets affecting
the cost, including interest rates, and/or availability of further
financing; significant increases in benefit plan costs or lower
investment returns on plan assets; changes in tax laws or treaties,
or in their interpretation; and changes in accounting assumptions
that regulatory agencies, including the SEC, may require or that
result from changes in the accounting rules or their application,
which could result in an impact on earnings.
Media
contacts: |
Kim Ancin |
908.559.3227 |
kimberly.ancin@verizon.com |
|
Eric Wilkens |
908.559.3063 |
eric.wilkens@verizon.com |
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